Franchise Agreement – Essential for Franchisors & Legal Professionals
A Franchise Agreement is a legally structured document that establishes the terms between a franchisor and a franchisee, ensuring clear guidelines on brand usage, operational expectations, financial commitments, and legal obligations. This agreement protects both parties by defining roles, responsibilities, and rights, enabling business expansion while maintaining brand integrity. It is an essential tool for franchisors, franchisees, and legal professionals who require a structured and enforceable agreement.
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Franchise Agreement
The term ‘franchising’ is normally used in connection with either a business format form of franchise or in connection with a product and trade mark franchise. Under a business format form of franchise, the Franchisor grants to the franchisee not only the right to use the franchisor’s trade marks but also the right to use an entire business format in accordance with which the franchisee must carry on their business.
Franchising in Australia is governed by the Franchising Code of Conduct.  The Franchising Code of Conduct is a mandatory industry code of conduct that has the force of law under the  Competition and Consumer Act 2010 (Cth).
The definition of ‘franchise agreement’ in the Franchising Code of Conduct is wide.  An agreement exhibiting the features specified in Clause 4(1) of the Code, will be a franchise agreement for the purposes of the Code.
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Why and When to Use a Franchise Agreement
A well-drafted Franchise Agreement provides clarity and legal protection, reducing risks and ensuring smooth business operations. This document is beneficial when:
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A business owner is granting rights to a franchisee to operate under their brand.
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A franchisee is purchasing the rights to use a brand’s intellectual property and business model.
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Both parties need to establish clear operational and financial expectations.
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Legal professionals require a standardised agreement for franchise arrangements.
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There is a need to protect trademarks, trade secrets, and brand reputation.
A Franchise Agreement is a crucial document for defining franchise relationships, ensuring both parties understand their obligations, and reducing the risk of legal disputes. It is particularly valuable for lawyers, franchisors, business owners, and franchise consultants who need a structured and enforceable contract.
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Franchise Agreement Includes
This Franchise Agreement Template covers matters required by the Franchising Code including:
·        Interpretation & Definitions
·        Disclosure documents & Cooling off period
·        Franchisee’s initial obligations
·        Term
·        Renewal
·        Territory
·        The Code
·        Designated representative
·        Training fee
·        Initial capital investment fee
·        Ongoing franchise fee
·        GST
·        Duties of the Franchisor
·        Duties of the franchisee
·        Premises
·        Customer referral
·        Accounts and Financial Records
·        Advertising and marketing
·        Non-Disclosure
·        Business name
·        Manual
·        Sale by franchisor
·        Sale by franchisee
·        Preconditions to consent to sale
·        Termination
·        Consequences of termination
·        Restraint of trade
·        Dispute resolution
·        Notice
·        Cost
·        Independent contractors
Franchise agreement template is approximately 20 pages long and includes gst.
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Franchise Code of Conduct 80 pgs.
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FRANCHISE CODE OF CONDUCT
A franchise code of conduct is a set of guidelines and ethical standards that govern the behavior and practices of franchisees and franchisors within a franchise system.
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